Analysis of Transactions

Analysis of Transactions
Chapter Three
Analysis of Transactions
3.1. Cash Transfers
Cash transfers are cash movements among government units. Cash transfers may be
made in the form of currency, checks or direct cash movement between bank
accounts.
Cash Transfers: Between Bank Accounts at Public Bodies and MOFED
Cash is transferred from MOFED bank accounts to bank accounts of public Bodies,
and cash is transferred from bank accounts of public Bodies to MOFED bank
accounts. These transfers are done in the form of Checks, and Direct bank transfers
evidenced by bank advices.
Cash transfers from MOFED bank accounts to bank accounts of public Bodies are
recorded:
 By MOFED, as a debit to the appropriate transfer code and a credit to 4105,

and
 By the public Body, as debit cash at Bank 4103 and a credit to the appropriate
transfer code.
Example: Assume a public Body receives from MOFED a transfer of Birr 100,000
for Capital expenditure and also further assume that you are an accountant in both
the PB and MOFED
Transaction Register of MOFED:
Account Cash at
No Description TB Others
Number bank 4105
Dr Cr Dr Cr
Cash
1 transfer to -- 4004 100,000 100,000
PB
Transaction Register of Public Body:

Account Cash at
Number bank 4103
Dr Cr Dr Cr
1 Cash - 4004 100,000 100,000
transfer
from
MOFED
At MOFED, although a transfer authorization to one bank account may include
funds for more than one BI, the entire transfer is one. Therefore, only one entry
should be made for the total of the transfer in the Transaction Register maintained
at MOFED. The BI code for the entry should be the BI code of the Reporting Entity.
If the bank charges a service charge for the transfer:
 The Service charge should be recorded as a debit to account code 6256.

 Cash at bank 4103 should be debited for the amount of cash actually received.
 The appropriate transfer account code should be credited for the gross
amount of the transfer.
Example: MOFED transfers Birr 100,000 to a public body for capital expenditure.
The bank deducts 2000 birr as a service charge; the public body receives Birr
98,000.
type of Account Cash at
No Description Others
budget Number bank 4105
Dr Cr Dr Cr
Cash
1 transfer to 4004 100,000 100,000
PB

Cash at
type of Account
No Description Others bank
budget Number
4103
Dr Cr Dr Cr
Bank
1 Service 02 6256 2000
Charge
Cash
transfer
4004 100,000 98,000
from
MOFED
Cash Transfers: Between Bank Accounts at Public Bodies and MOFED:

From Public Bodies to MOFED at federal level
Cash transfers from bank accounts of public Bodies to MOFED bank accounts are
recorded:
 By MOFED, as a debit to Cash at Bank4105 and a credit to the appropriate

transfer code, and
 By the Public Body, as a debit to the appropriate transfer code and a credit to
Cash at Bank 4103.
Example: A Public Body collected revenue of Birr 60,000. The cash is transferred
to MOFED.
Transaction Register of MOFED
Account Cash at
Number bank 4105
Dr Cr Dr Cr
Cash
1 transfer - 4009 60,000 60,000
from PB

Account Cash at
Number bank 4103
Dr Cr Dr Cr
Cash
1 transfer to - 4009 60,000 60,000
MOFED
Some public Bodies deposit cash directly into a MOFED bank account when revenue
is collected. If revenue is deposited directly to a MOFED bank account, the entry in
the Transaction Register of the public Body is a debit to the appropriate transfer
account code and a credit to the appropriate revenue account code.
Cash Transfers: Between MOFED safe and Public Bodies
According to MOFED and DSA Project manual, January 2002, the Treasury
Department at MOFED maintains a safe. Public Bodies can withdraw a maximum of
Birr 2,000 from the safe with appropriate approval. MOFED-CAD records the Cash
payment Voucher as a transfer in the Federal Transaction Register. The public Body
records the Cash payment Voucher as a transfer in its Transaction Register.
Example: A Public Body provides Ge/Be/We 11/2 to Treasury Department for
payment of Birr 1,000 from the safe at MOFED.
Account Cash in
Number Safe 4101
Dr Cr Dr Cr
Cash
1 - 4002 1,000 1,000
transfer
Transaction Register of public Body:
Account Cash in
Number Safe 4101
Dr Cr Dr Cr
Cash
1 - 4002 1,000 1,000
transfer
Cash Transfers: Between Public Bodies

Cash may be transferred from a bank account of one public body to a bank account
of another public body. These transfers are done in the form of: Checks, and Direct
bank transfers evidenced by bank advices. Cash transfers from a bank account of one
public Body to a bank account of another public Body are recorded:
 By the public Body sending the cash, as a debit to transfer code 4008 and a
credit to cash at Bank 4103,and
 By the public Body receiving the cash, as a debit Cash at Bank 4103 and a
credit to transfer code 4008.
Example: Public Body #1 transfers Birr 90,000 to public Body #2.

Transaction Register of public Body #1:
Account Cash at
Number bank 4103
Dr Cr Dr Cr
Cash
1 transfer to - 4008 90,000 90,000
PB #2
Transaction Register of public Body #2:

Account Cash at bank
Number 4103
Dr Cr Dr Cr
Cash
1 transfer to - 4008 90,000 90,000
PB #1
Cash Transfers: Within Public Body
In the same Manual prepared by MOFED&DSDA Project, it is indicated that some
public Bodies maintain branch bank accounts. The public Body may transfer cash
from one bank account to another bank account of its branch. These transfers are
done in form of: Checks, and Direct bank transfers evidenced by bank advices. Cash
transfers within a public body from bank Account #1 to bank Account #2 are
recorded:
 By the accounting unit for bank Account #1, as a debit to transfer code
(transfer between financial bureau and wereda finance/ district finance/
office) 4011 and a credit to cash at Bank 4103, and
 By the accounting unit for bank account #2, as a debit cash at bank 4103 and a
credit to transfer code 4011.
After both transactions are recorded in the consolidated general ledger of the public
body, the net effect of the internal transfer is zero (the balance in transfer code 4011
is zero).
For control purposes, if the public body transfers to more than one branch bank
account, a subsidiary ledger should be maintained by the main bank account. Each
branch bank account that receives or sends a transfer using account code 4011
should have its own subsidiary ledger card under transfer code 4011. This will aid
consolidation in the general ledger of the public body and improve cash control
within the public Body.
Example: Bank Account #1 transfers Birr 80,000 to Bank Account #2
Transaction Register of Bank Account #1:
Account Cash at
Number bank 4103
Dr Cr Dr Cr
Cash
1 transfer to - 4011 80,000 80,000
BA #2
Transaction Register of Bank Account #2:

Account Cash at
No Description TB Other
Number bank 4103
Dr Cr Dr Cr
Cash transfer
1 - 4011 80,000 80,000
BA #1
3.2 Non - Cash Transfers

Non-Cash transfers are used to record a transfer when cash does not actually move.
The authorization for a non-cash transfer usually is a letter from MOFED.
Example: Assume Ministry of Health (MOH) requests MOFED to pay customs duty
amounting to Birr 250,000 on its behalf to the customs Authority (CA) for motor
vehicles from its capital expenditure budget and further assuming that you are the
accountant in these institutions.
Solution:
Cash
Account at
Number bank
4105
Dr Cr Dr Cr
Transfer to
1 MOH - - 4054 250,000
Customs duty
Transfer from
CA-Customs - 4055 250,000
duty
Transaction Register of Ministry of Health:

Cash
Account at
Number bank
4103
Dr Cr Dr Cr
Purchase of
1 motor 02 6311 250,000
vehicles
Transfer from
MOFED- - 4054 250,000
Customs duty
Transaction Register of Customs Authority:

Cash
Account at
Number bank
4103
Dr Cr Dr Cr
1 Transfer to - 4055 250,000
MOFED
Duty on
Motor - 1301 250,000
vehicles
3.3. Receipt of Revenue /Assistance/ Loan

Public Bodies are authorized to collect revenue on behalf of the FGE. In addition,
Public Bodies may receive funds for assistance and loan directly from donors and
lenders. Receipts are collected in the form of currency, checks and direct bank
transfers. Receipts are recorded as a debit to cash at Bank 4103 and a credit to the
appropriate revenue /assistance/ loan account code.
Example:Assume you are the accountant of Ministry of foreign affairs and that you
collected birr 10,000 in fees for visas.
Transaction Register of Ministry of Foreign Affairs:
Account Cash at
Number Bank 4103
Dr Cr Dr Cr
1 Revenue - 1411 10,000 10,000
Transfer of collections Directly to MOFED

In some public bodies, revenue collectors make deposits directly to a MOFED bank
account. It is important that the collector adequately identify the public body for
which the deposit is made.
 When MOFED receives the bank advice, MOFED records a debit to cash in
Bank 4105 and a credit to transfer account code 4009.
 When the public body receives the Receipt voucher from revenue collectors,
the public body records a debit to transfer account code 4009 and a credit to
the appropriate revenue account code.
Example: MOFED receives a deposit from Internal Revenue for Birr 40,000. The
deposit is from the collection of agricultural income tax.
Account Cash at
Number bank 4105
Dr Cr Dr Cr
Transfer from
1 - 4009 40,000 40,000
IR
Transaction Register of Internal Revenue:
Cash at
Account
No Description TB Others bank
Number
4103
Dr Cr Dr Cr
Agricultural
1 4009 40,000
Revenue
Transfer 1107 40,000
3.4. Cash Expenditures

Public Bodies are authorized to make cash expenditures from funds budgeted for
that purpose. Cash expenditures are made using currency, checks and direct bank
transfers.
Cash Expenditures: Payments to Regions/Transfer Recipients by
MOFED
Payments by MOFED to regions and transfer recipients (Functional classification
4000 - 4099, are budgeted expenditures of the federal government. When MOFED
makes these payments, MOFED records the expenditure in the federal Transaction
Register.
Example:Assume a subsidy payment of Birr 300,000 is made to a region by
MOFED where you are an accountant.
Account Cash at
Number bank 4105
Dr Cr Dr Cr
Region
1 6411 300,000 300,000
subsidy
Cash Expenditures: Check Payments by Accountants

Only accountants are allowed to make payments using checks.
Example: Assume that an accountant pays by check an amount of Birr 50,000 for
office supplies.
Account Cash at
Number bank 4103
Dr Cr Dr Cr
1 Office 6212 50,000 50,000
supplies paid
in cash
Cash Expenditures: Cash payment By MOFED on Behalf of Public Bodies

MOFED can make cash payments on behalf of a public body. The transaction begins
with a letter from the public Body to MOFED requesting that the payment be made
on its behalf. Cash payments made by MOFED on behalf of Public Bodies are
recorded:
 By MOFED, as a debit to the appropriate transfer code and a credit to Cash at

Bank 4105, and
 By the public Body, as a debit to the appropriate expenditure code and a credit
to the appropriate transfer code.
Example: The Ministry of Health (MOH) requests MOFED to pay for a motor
vehicle on its behalf amounting to Birr 280,000 from its capital expenditure budget.
Account Cash at
Number bank 4105
Dr Cr Dr Cr
Transfer to
1 - 4004 280,000 280,000
MOH
Transaction Register of Ministry of Health:
Cash
Account at
Number bank
4103
Dr Cr Dr Cr
Purchase of
1 motor 02 6311 280,000
vehicles
Transfer from
- 4004 280,000
MOFED
Cash Expenditures: Letter of Credit

A Public Body may need to open a Letter of Credit as part of an international
purchase agreement. Opening a letter of credit means putting cash in a restricted
bank account dedicated to payment of the purchase price when appropriate
conditions are met. There are two processes for opening a letter of credit:
 If the letter of credit is for Birr 50,000 or less, the public body can open the
letter of credit.
 If the letter of credit is for more than Birr 50,000, the public body must
request that MOFED open the letter of credit.
Cash Expenditures: Letter of Credit: Opened by Public Body

When a public Body opens a Letter of Credit, cash is paid, using a Bank payment
Voucher, from the bank account of the public Body to a restricted bank account at
the national bank of Ethiopia. In the transaction register for the public body's bank
account, expenditure is recorded. The public body uses another transaction register
for the restricted bank account. The public body must combine the monthly report of
the restricted account with the monthly report of the regular bank account for
reporting to MOFED.
Example: The ministry of Health (MOH) establishes a restricted bank account to
open a letter of credit for the purchase of medical supplies valued at birr 30,000.
Transaction Register - Regular Bank Account of Ministry of Health:
Account Cash at
Number bank 4103
Dr Cr Dr Cr
Purchase of
1 medical 02 6214 30,000 30,000
supplies
Transaction Register - Restricted Bank Account of Ministry of Health:

Account Cash at
Number bank 4103
Dr Cr Dr Cr
Letter of credit
1 - 5500 30,000 30,000
#xxxx
Cash Expenditures: Letter of Credit: Opened by MOFED on behalf of

Public Body
A Public Body requests that MOFED open a letter of credit on its behalf.
MOFED: Transfers cash to restricted bank account at national bank of Ethiopia on
behalf of the public body, Records a cash transfer to the public body, and Notifies the
public body of the transaction.
The Public Body: Records the cash transfer as expenditure in the transaction
Register for the public Body's bank account, and Records the Letter of Credit in
another Transaction Register for the restricted bank account.
Example: The Ministry of Health (MOH) requests MOFED to open a letter of credit
on its behalf amounting to Birr 700,000 for motor vehicles from its capital
expenditure budget.
Transaction Register:
Account Cash at
Number bank 4105
Dr Cr Dr Cr
Transfer to
1 - 4054 700,000 700,000
MOH
Transaction Register bank account MOH:

Account Cash at
Number bank 4103
Dr Cr Dr Cr
Purchase of
1 Motor 02 6311 700,000 700,000
vehicle
Transfer
2 from - 4054 700,000
MOFED
Transaction Register - Restricted Bank Account of Ministry of Health:
Account Cash at
Number bank 4103
Dr Cr Dr Cr
Letter of
1 - 5531 700,000 700,000
Credit #xxxx
Cash Expenditures: Cash Payment by Public Body to Region
Occasionally, public Bodies make cash payments to regions.Some of the funds are
intended for sector bureaus in the regions. The sector line ministry acts as a treasury
department by distributing the cash to the region sector bureaus directly.
All payments to the regions from the federal level are budgeted as part of the region's
subsidy. When a public body pays cash to regions, the payment is part of the regions
subsidy. The public body should record the payment as a subsidy payment.
Example: The ministry of Health (MOH) sends Birr 53,000 to a region as part of a
sector development plan.
Transaction Register - Ministry of Health:
Account Cash at
Number bank 4103
Dr Cr Dr Cr
Region
1 - 6411 53,000 53,000
Subsidy
Cash Expenditures: Cash Payment Requiring Withholding of Tax

The tax authority requires that a tax must be paid on specified purchases over a
certain amount. The purchaser collects the tax as a withholding from the purchase
price. The threshold amount and the tax rate may vary each year. The tax is paid to
the appropriate authority, federal or regional government, depending on the location
of the supplier.
The supplier can reclaim the withholding tax. The tax authority creates a special tax
receipt that should be issued to the supplier when the tax is withheld. This receipt is
not an accounting document and should not be referenced in any accounting record.
If a regional tax authority has not issued a special tax receipt, the federal special tax
receipt should be used .The withholding tax does not reduce the cost of the goods to
the public body. The withholding tax is a reduction to the payment made to the
supplier. The payment is made to the appropriated government instead. When a
purchase is made that requires the withholding of tax, a bank payment voucher is
prepared that indicates, in the space provided for accounting use only.
The expenditure account code with a debit for the full purchase price. If the tax is
federal, withholding tax revenue code 1103 or 1104 (depending of whether the
supplier is an individual or a corporation) with a credit for the amount of the tax.
The only exception is if the payment is made with retained revenue. If retained
revenue is the source of funds for the payment, payable account code 5028 is
credited for the amount of the tax.If the tax is regional, payable account code 5026
with a credit for the amount of the tax.Cash at bank 4,103 with a credit for the actual
amount paid to the supplier.
Cash Expenditures: Cash Payment Requiring Withholding of Tax:

Federal Tax
When federal tax is withheld from a purchase, the tax is recorded as revenue
immediately subsequently; an amount of cash equal to the tax is transferred to
MOFED.
Example: A public body buys office supplies from a corporation for Birr 200,000
from its recurrent expenditure budget - Birr 198,000 relates to the cost of the office
supplies and Birr 2,000 is the withholding tax.
Transaction #1: Payment effected to supplier
No Description TB Account Others Cash at
Number bank 4103
Dr Cr Dr Cr
Office
1 01 6212 200,000
supplies
Withholding
1104 2,000 198,000
tax revenue
Transaction #2: Transfer to MOFED
Account Cash at
Number bank 4103
Dr Cr Dr Cr
Transfer to
2 4009 2,000 2,000
MOFED

Account Cash at
Number bank 4105
Dr Cr Dr Cr
Transfer to
1 4009 2,000 2,000
MOFED
Cash Expenditures: Cash Payment Requiring Withholding of Tax:

Regional Tax
When regional tax is withheld from a purchase, the tax is recorded as a payable to
the region. Subsequently, an amount of cash equal to the tax is transferred to
MOFED. MOFED pays the tax amount to the region. A subsidiary ledger should be
maintained for payable to region account code 5026 if tax is collected for more than
one region. Each region should be a separate account in the subsidiary ledger.
Example: A public body buys office supplies for Birr 200,000 from its recurrent
expenditure budget - Birr 198,000 relates to the cost of the office supplies and Birr
2,000 is the regional withholding tax.
Transaction #1: Payment effected to supplier
Account Cash at
Number bank 4103
Dr Cr Dr Cr
Office
1 01 6212 200,000
Supplies
Tax payable 5026 2,000 198,000
to Region
Transaction #2: Transfer to MOFED
Account Cash at
Number bank 4103
Dr Cr Dr Cr
Payable to
2 5026 2,000 2,000
MOFED
Account Cash at
Number bank 4105
Dr Cr Dr Cr
Tax payable to
1 5026 2,000 2,000
region
Transaction #3: MOFED pays tax to region

Account Cash at
Number bank 4105
Dr Cr Dr Cr
Payable to
2 5026 2,000 2,000
region
Cash Expenditures: Construction Projects

The long-term construction projects involve complicated financial arrangements.
Several accounting entries are necessary over the life of the project. In general, when
a construction contract is signed, there are several steps in the payment process. At
each stem, an accounting entry is required. The general steps are:
 Payment of an advance: Usually the contract calls for an advance payment to

the contractor. The advance payment is proportionately deducted from future
payments to the contractor.
 Progress payments based on payment certificates: Usually the contract calls
for partial payment of the total contract price as the construction reaches
agreed-upon percentages of completion. A payment certificate is evidence that
the agreed-upon completion percentage is reached.
 Payment of the retention: Usually a percentage of the payment is retained
and not paid until final acceptance of the completed construction.
Example: Assume the following:

A contract is signed to construct a building for 2,000,000 Birr. Terms of contract
are:
Initial advance of 20% = 400,000 Birr
Advance adjusted proportionately with each payment certificate approval.
Retention of 10% withheld from each payment certificate & paid after final approval.
Steps in payment are:
Payment of 20% advance.
Payment certificate when 40% complete.
Transaction #1: payment of 20% advance:
Accountant prepares a check for 400,000 Birr.
Accountant prepares payment Voucher for 400,000 Birr:
Debit to 4251 & Credit to 4103
Account Cash at
Number bank 4103
Dr Cr Dr Cr
Advance to
1 4251 400,000 400,000
contractor
Transaction #2: payment certificate when 40% complete.
Accountant Prepares a check for 560,000 Birr as follows:
800,000 payment certificate request
160,000 adjustment to advance
80,000 retention.
Accountant prepares payment Voucher as follows:
Debit to 6323 for 800,000
Credit to 4251 for 160,000
Account Cash at
Number bank 4103
Dr Cr Dr Cr
Construction
2 02 6323 800,000
- Building
Advance to
4251 160,000
contractor
Retention on
5061 80,000 560,000
contract
Accountant Preparesa check for 560,000 Birr as follows:
160,000 adjustment to advance
80,000 retention
Accountant prepares payment voucher as follows:
Account Cash at
Number bank 4103
Dr Cr Dr Cr
Construction
4 02 6323 800,000
- Building
Advance to
4251 160,000
contractor
Retention on
5061 80,000 560,000
Contract

Accountant prepares check for 280,000 Birr as follows:
80,000 adjustments to advance
40,000 retention
Accountant prepares payment Voucher as follows:
Account Cash at
Number bank 4103
Dr Cr Dr Cr
Construction
4 02 6323 400,000
- Building
Advance to
4251 80,000
contractor
Retention on
5061 40,000 280,000
Contract
Transaction #5: Payment of retention after final approval of project:
Accountant prepares a check for 200,000 Birr.
Accountant prepares payment voucher for 200,000 Birr:
Debit to 5061 & Credit to 4103
Account Cash at
Number bank 4103
Dr Cr Dr Cr
Retention on
5 5061 200,000 200,000
contract
3.5. Salary
Public Bodies pay salaries to employees every month. This section describes the
accounting for:
Payment of salary
Unpaid salary
Unearned salary
Payment of Salary
The salary payment transaction is complex. The public body must record the gross
salary amount and government's portion of pension as expenditure to maintain
budget control, but only the net salary amount is transferred to, and paid by the
public body.
After the salary request is approved, MOFED transfers the net salary amount to the
public body and the total pension amount, employee and government contribution,
to the pension Authority. Although cash for pension is transferred directly to the
pension authority, MOFED records the cash transfer as if the cash was transferred to
the public body. At MOFED, two transfer entries to the public body are recorded in
the transaction register:
 A debit to transfer coder 4001 and a credit to cash at bank 4105 for the net
salary amount.
 A debit to transfer coder 4001 and a credit to cash at bank 4105 for the total
pension amount sent to the pension Authority.
Each transfer amount is reported to the public Body separately on Ge/Be/We 12/1
with Model 33. When the public Body receives Ge/Be/We 12/1, the public Body
prepares:
 A receipt voucher for the total amount of cash received. The entry is a debit to
cash at bank 4103, a debit to pension payable account code 5003 for the
amount of cash paid to the pension Authority and a credit to transfer code
4001.
 A journal voucher to record salary and pension expense. The entry is a debit to
salary expense code 6111 (6112 for military) for the gross salary amount, a
debit to pension expense code 6131 (6132 for military) for the government’s
portion of the pension contribution, a credit to salary payable code 5004 for
the net salary amount, a credit to pension payable code 5003 for the amount
of each paid to the pension Authority, a credit to income tax code 1101 for tax
withheld from salary, and a credit to any other withholding amounts.
Example:Assume the Ministry of Agriculture (MOA) requests salary for the month
of July 2001 with the following details and also assume that you are the accountant
in MOA and MOFED.
Gross salary 40,000
Deduction: salary advance 1,200
Pension expense - 6% 2,400
Penalty for absenteeism 500
Employee pension - 4% 1,600
Net Salary payable 32,700
Income tax 4,000
Account Cash at
Number bank 4105
Dr Cr Dr Cr
Transfer for
1 4001 32,700 32,700
MOFED
Transfer to
2 4001 4,000 4,000
PB
Transaction Register of MOA:
Account Cash at
Number bank 4103
Dr Cr Dr Cr
Transfer to
1 4001 36,700
PB
Pension
5003 4,000 32,700
payable
Salary
2 01 6111 40,000
Expense
Pension
01 6131 2,400
Expense
Salary
5004 32,700
payable
Income Tax 1101 4,000
Staff
4203
Advance 1,200
Fines 1485 500
Pension
5003 4,000
Payable
Unpaid Salary
Net salary amount is recorded as salary payable when salary expense is recorded (see
above). When salary is paid, salary payable is debited for the amount paid. Any
unpaid salary is the amount remaining in the salary payable account code 5004 after
salary is paid. When unpaid salary is paid, the entry is a debit the salary payable code
5004 and a credit to cash. After salary is paid, a subsidiary ledger for salary payable
account should be maintained. Each unpaid employee should be an account in the
subsidiary ledger.
Unearned Salary
Occasionally, salary is requested and received, but the employee is not entitled to the
entire salary amount received. For some reason, the employee quits working for the
public Body during the month. When this happens, the salary entry explained above
must be reversed for that employee, and the pension transfer must be corrected. In
addition, MOFED must be notified so that the pension transfer and subsequent
months salary can be adjusted.
Example: Suppose an employee in the Ministry of Agriculture worked only half of
July instead of the whole month. This is discovered after the salary expense entry in
the example above. The amounts of overpayment are:
Gross Salary 1000 Income tax 70
Pension expense - 6% 60 Salary Payable 890
Employee pension - 4% 40
Transaction #1: Reverse salary expense
Cash at
Account
Number
4103
Dr Cr Dr Cr
Salary
1 01 6111 1000
Expense
Pension
01 6131 60
Expense
Salary
5004 890
Payable
Income Tax 1101 70
Pension
5003 100
Payable
Transaction #2: Adjust Pension transfer
Cash at
Account
Number
4103
Dr Cr Dr Cr
Transfer -
2 4001 100
Salary
Pension
5003 100
payable
Cash at
Account
Number
4105
Dr Cr Dr Cr
Advance to
1 4210 100
pension
Transfer -
2 4001 100
Salary
Transaction #3: Next month's salary transfer

The Ministry of Agriculture (MOA) requests salary for the month of August 2001
with the following details:
Gross salary 38,000
Income tax 3,800
Pension expense - 6% 2,280
Deduction: salary advance 1,200
Employee pension - 4% 1,520
Net Salary payable 31,480

Account Cash at
Number bank 4103
Dr Cr Dr Cr
Transfer to
1 4001 31,480 31,480
PB
Transfer to
2 4001 3,800
PB
Advance to
4210 100 3,700
Pension

Account Cash at
Number bank 4103
Dr Cr Dr Cr
Transfer to
1 4001 35,280
PB
Pension
5003 3,800 31,480
payable
Salary
2 01 6111 38,000
Expense
Pension
01 6131 2280
Expense
Salary
5004 31,480
payable
Income Tax 1101 3,800
Staff
4203 1200
Advance
Pension
5003 3,800
Payable
3.6. Receivables and Payables

A receivable is an amount owed to a public Body that does not have terms of
repayment detailed in a signed agreement. Receivables usually are created when:
 Cash is transferred but must be returned unless certain conditions are met.
 Advances are given with the understanding that the amount must be repaid or
otherwise accounted for, or goods or services must be delivered.
A payable is amount owed by a public body that is due within one year. Payables
usually are created when:
 Cash is received but must be returned unless certain conditions are met.
 Goods or services are delivered but payment is not yet made.
Receivables and Payables: With MOFED

In some situations, MOFED advances cash to public Bodies. MOFED records the
advance as a receivable, and the public Body records the advance as a payable. Cash
movements between MOFED and a public Body are recorded as a receivable and a
payable, rather than a transfer, if the funds were not requested by Ge/Be/We 11/xx.
Advances must be repaid to MOFED or otherwise accounted for.
Example Prior to receipt of its budget notification, a public Body requests funds in
June to pay recurrent expenditures. MOFED sends Birr 7,000
Cash at
Account
Number
4105
Dr Cr Dr Cr
Advance for
1 4206 7,000 7,000
Recurrent

Account Cash at
Number bank 4103
Dr Cr Dr Cr
Due to
1 5024 7,000 7,000
MOFED
When the public Body receives its budget notification, a Ge/Be/We 11/2 is sent to
MOFED for Birr 14,000. This requests includes the 7,000 Birr received as an
advance. MOFED approves the request, reduces the cash transfer by 7,000 Birr, and
transfers Birr 7,000 in cash.
Cash at
Account
Number
4105
Dr Cr Dr Cr
Advance
1 4206 7,000
Recurrent
Transfer -
4002 14,000 7,000
Recurrent

Cash at
Account
Number
4103
Dr Cr Dr Cr
Due to
1 5024 7,000
MOFED
Transfer -
4002 14,000 7,000
Recurrent
Receivables and Payables: with Employees
Three situations are described here:
 Long - term salary advances.

 Amounts due from employees as reimbursement for use of government
property.
 Handling of funds held by a public body on behalf of an employee
Receivables and payables: with Employees: Long - Term Salary

Advance
An employee can receive a long-term advance on salary (longer than one month)
under appropriate conditions. When a long-term salary advance is processed,
interest is charged and withheld from the advance. The public body is responsible
for repayment of salary advances to its employees.
Example: A long -term salary advance of Birr 2,000 is requested and approved.
MOFED transfers the net amount to the public body after deducting the applicable
interest on the advance amounting to Birr 200.
Transaction #1: cash transfer from MOFED
Account Cash at
Number bank 4105
Dr Cr Dr Cr
1 Transfer 4005 1,800 1,800
Account Cash at
Number bank 4103
Dr Cr Dr Cr
1 Transfer 4005 1,800 1,800
Transaction #2: Payment of Advance
Account Cash at
Number bank 4103
Dr Cr Dr Cr
Staff
1 4203 2,000
Advance
Interest 1465 200 1,800
Receivables and Payables: With Employees: Reimbursed Payments
In certain circumstances, employees make personal use of government property.
When this occurs, the public body must charge the employee and collect payment.
Example: A Public body receives a telephone bill for Birr 300. Included in the bill
are personal telephones calls made by an employee.
Treatment #1: The Public body knows, at the time the telephone bill is paid, that the
amount of the personal telephone calls totals Birr 100.
Cash at
Account
Number
4103
Dr Cr Dr Cr
When the telephone
bill is paid:
Telephone
1 01 6258 200
Expense
Staff Advance 4203 100 300
When employee
pays:
2 Staff Advance 4203 100 100
Treatment #2: The public body does not know, at the time the telephone bill is paid,
the amount of the personal telephone calls.
Account Cash at
Number bank 4103
Dr Cr Dr Cr
When the telephone
bill is paid:
Telephone
1 01 6258 300 300
Expense
When employee
pays:
Telephone
2 01 6258 100 100
Expense
Receivables and Payables: With Employees: Funds Held on Employee's

Behalf
In certain circumstances, funds are received by a public body and are intended for
the use of an employee. These funds are not budgeted by the FGE. The public body is
simply a conduit used for assigning the funds from a donor to an employee. The
public body should:
 Only handle funds that are used by the employee to further the objectives of
the public body, and
 Never give the employee access to other funds held in the same bank account
(do not allow the employee access to checks).
Movements of funds held by public bodies on behalf of an employee are not recorded
as revenue or expenditure for the government. The funds are due to the employee
while in the custody of the public body.
Example: A donor deposits Birr 3,000 in the bank account of a public body to
support the research of an employee.
Transaction #1:Funds are deposited
Number bank 4103
Dr Cr Dr Cr
1 Due to staff 5021 3,000 3,000
Transaction #2: The employee receives 550 Birr from the fund
Account Cash at
Number bank 4103
Dr Cr Dr Cr
2 Due to staff 5021 550 550
Receivables and Payables: With Employees: Employee Transferred with
Salary Advance
Employees may be transferred from one public body to another; the transferred
employee may have a long-term salary advance with an outstanding balance. The
balance for the employee in the advance account must be transferred with the
employee from the accounting records of the former employer to the records of the
new employer. The document is a letter of transfer that details the balance in the
employee’s advance account. Each public body prepares a journal voucher based on
the letter.
Example: An employee is transferred from public Body #1 to public Body #2. The
employee has a long-term advance with an outstanding balance of Birr 6,000.
Transaction Register of Public Body #1:
Cash at
Account
Number
4103
Dr Cr Dr Cr
Net
5601 6,000
Asset/Equity
Advance to
4203 6,000
Staff
Transaction Register of Public Body #2:
Cash at
Account
Number
4103
Dr Cr Dr Cr
Advance to
4203 6000
Staff
Net
5601 6,000
Asset/Equity
Receivables and Payables: With Suppliers
In the process of procurement, the payment of cash and the receipt of goods and
services do not occur simultaneously. When there is a timing difference, a receivable
or a payable is created.
Receivables and Payables: With Suppliers: Receivables from Suppliers
Receivables are created when a supplier is paid for goods or services prior to their
delivery. In this case, the supplier owes to the public body: Goods and services equal
to the cash provided, or Return of the cash.
Example: A public Body pays an advance of Birr 500 to a supplier for procurement
of office supplies. The supplier delivers the office supplies after 30 days and the
actual invoice amounts to Birr 2,500.
Transaction #1: payment of advance.
Cash at
Account
Number
4103
Dr Cr Dr Cr
Advance to
1 - 4253 500 500
Supplier
Transaction #2: Delivery of supplies.
Cash at
Account
Number
4103
Dr Cr Dr Cr
1
Office Supplies 01 6212 2,500
Advance to
- 4253 500 2,000
Supplier
Receivables and Payables: With Suppliers: Payables to suppliers
Payables are created when a supplier delivers goods or services prior to receiving
payment.
In this case, the public body owes to the supplier: Payment for the cost of the goods
and services, or Return of the goods.
Example: A public body receives office supplies amounting to Birr 2,500 on credit
from a supplier. Payment is made after 30 days.
Transaction #1: Receipt of office supplies
Number bank
4103
Dr Cr Dr Cr
Office
1 01 6212 2,500
Supplies
Sundry
5002 2,500
creditors
Transaction #2: Payment is made.
Account Cash at
Number bank 4103
Dr Cr Dr Cr
Sundry
1 - 5002 2,500 2,500
Creditors
Receivables and Payables: With Suppliers: Grace Period Payables
The first 30 days of the fiscal year are called the grace period. The financial Law
permits public Bodies to expend funds from their prior year's recurrent and capital
budgets during the grace period for goods and services delivered before the end of
the fiscal year. Amounts due to suppliers on the last day of the fiscal year, that are
paid during the grace period from the prior year's budget, are called grace period
payables (account code 5001). Transfers of funds from MOFED to public Bodies,
that are used to pay grace period payables, are given account code 4007.
Example: In the first 30 days of the fiscal year, a public body pays Birr 12,000 for
office supplies that were recorded as grace period payables from the prior year's
capital expenditure.
Transaction #1: Provision for grace period payables last year.
Last Year's Transaction Register of Public Body:
Cash at
Account
Number
4105
Dr Cr Dr Cr
Office
1 02 6212 12,000
supplies
Grace period
5001 12,000
payables
Transaction #2: Transfer of funds for grace period payables this year.
This year's Transaction Register MOFED:
Account Cash at
Number bank 4103
Dr Cr Dr Cr
Transfer -
1 - 4007 12,000 12,000
GPP
This year's Transaction Register of Public Body:
Account Cash at
Number bank 4103
Dr Cr Dr Cr
Transfer -
1 - 4007 12,000 12,000
GPP
Transaction #3: Payment of grace period payables this year.
This year's Transaction Register of Public Body:
Account Cash at
Number bank 4103
Dr Cr Dr Cr
Grace period
1 5001 12,000 12,000
payables
Receivables and Payables: with Regions
Occasionally, public Bodies make cash payments to regions. Payments to the regions
from the federal level are budgeted as part of the region's subsidy. The public Body
should record the payment as a subsidy payment. A rare exception occurs when the
funds are part of the approved budget for the public Body and in this rare case, the
item of expenditure is part of the approved budget for the public body, the region is
simply action as a purchasing agent for the ministry. The responsibility for the
budgeted expenditure cash remains with the public body, although the expenditure
is executed in the regional since a settling of the funds is expected, the transaction is
recorded as a receivable By MOE at Federal level.
Example: The Ministry of Education (MOE) sends Birr 55,000 to Amhara Regional
Education Bureau (AREB). The Amhara Regional Education Bureau returns invoices
for the book totaling Birr 47,000 and cash totaling Birr 8,000 to the Ministry of
Education.
Transaction #1: Cash is sent to AREB
Transaction Register MoE:
Account Cash at
Number bank 4103
Dr Cr Dr Cr
Advance to
1 - 4208 55,000 55,000
region
Transaction #2: Cash and invoices are received from AREB.
Transaction Register of MOE:
Number bank
4103
Dr Cr Dr Cr
1
Books 02 6215 47,000
Advance to
4208 55,000 8,000
region
Receivable and Payables: Deposits
Some public bodies collect and return deposits. Deposits are not budgeted. The
receipt and return of deposits may be documented using special forms (Models 85
and 86 or Models 185 and 186). Deposits may be kept in the safe, in the main bank
account of the public body, or in a separate bank account.
A deposit is a payable for a public body. A public body must return the deposit upon
demand of the depositor. A public body should not spend deposit funds. When the
deposit is returned, the payable is cancelled.
Receivable and Payables: Deposits: Receipt and Return of Deposit
Example: A public body collects a deposit of Birr 40,000 as bid security. The bid is
unsuccessful and the deposit is returned at a later date.
Transaction #1: Receipt of Deposit.
Account Cash at
Number bank 4103
Dr Cr Dr Cr
Bid security
1 - 5054 40,000 40,000
Deposit
Transaction #2: Refund of Deposit.
Account Cash at
Number bank 4103
Dr Cr Dr Cr
Bid Security
1 - 5054 40,000 40,000
Deposit
Receivables and payables: Deposits: Deposits kept in separate Bank
Account
If a bank account is maintained for deposits only, there is no need to keep a
transaction register for the bank account. A detailed record of each deposit must be
maintained, but the form of the record can be cashbook with subsidiary records for
each deposit.
Monthly, the cash balance in the cashbook must be reconciled with the bank
account's bank statement and with the detailed subsidiary records. After
reconciliation, the corrected deposit amount must equal the cash balance in bank.
This amount should be entered in the transaction register of the public body as
follows:
 The deposit account code should be debited and cash in bank 4103 credited
for the current balance in the deposit account. After this entry, the balance in
the deposit account is zero.
 Cash in bank 4103 should be debited and the deposit account code should be
credited for the corrected deposit amount at the end of the current month.
These should be the only accounting entries in the public body's transaction register
that involves the deposit account. No subsidiary ledger is necessary; the detailed
subsidiary records for the cashbook services as the subsidiary ledger.
Example: The balance per the General Ledger in deposit account code 5051 is Birr
400,000. The deposit bank account is reconciled to the detailed subsidiary records
and the corrected balance is Birr 600,000
Transaction #1: Set deposit account balance to zero.
Transaction Register of Customs:
Account Cash at
Number bank 4103
Dr Cr Dr Cr
Customs
1 - 5051 400,000 400,000
Deposit
Transaction #2: Record corrected deposit.
Transaction Register of the public Body:
Account Cash at
Number bank 4103
Dr Cr Dr Cr
Customs
1 - 5051 600,000 600,000
Deposit
3.7 Aid in Kind

Aid in kind is goods or services (such as technical assistance) provided to a public
body by donors. Aid in kind is received when goods are received or services are
rendered, and no payment is expected. Aid in kind represents two transactions
simultaneously: the receipt of assistance and the expenditure of assistance. Aid in
kind should be budgeted and recorded as both revenue and expenditure. The
expenditure should be recorded in the subsidiary ledger for the budgeted project,
using the 4-digit source of funding code assigned to the project.
Example: Assume aid in kind is received by a public body in which you are working
as an accountant in the form of a motor vehicle with a cost of Birr 200,000 from
USAID under the capital expenditure budget for project code 2356.
Cash at
Account
Number
4103
Dr Cr Dr Cr
Motor
1 02 6311 200,000
vehicles
Assistance 2084 200,000
All aid in kind entries are recorded in local currency only.
3.8 Financial Document Transmittal Voucher: Me/He

Me/He is the document prepared as evidence for the transfer of financial
documents, such as expenditure vouchers, between responsible persons in the
accounting system.The purpose of the Financial Document Transmittal Voucher is to
record the transfer of financial documents from one responsible party to another.
Preparation and Source Documents: Whoever is receiving financial documents
prepares the Financial Document Transmittal voucher.The format of the Financial
Document Transmittal voucher is shown in Figure 3.1
3.9 Public Bodies who receive No Treasury Funds

Some public bodies receive no funds from treasury. Instead, their entire budget is
financed by revenue that they collect and retain. However, their reports may be
submitted quarterly rather than monthly.
3.10 Closing Entry

As discussed in Module two of this course, special routines are required at the end of
the fiscal year to maintain general and subsidiary ledgers. Specifically, entries must
be recorded in every general and subsidiary ledger at the end of the year after the
last monthly report is prepared and sent to MOFED. These are called closing entries
which must be recorded in every general and subsidiary ledgers at the end of the
year after the last monthly report is prepared and sent to MOFED. These are called
closing entries. Closing entries also is required in MOFED's general and subsidiary
ledgers after the annual accounts are closed.
The purpose of closing entries is to set all temporary accounts in the general ledger,
and all related subsidiary accounts, to zero. Temporary accounts are:
 Revenue /Assistance/ Loan account codes 1000 - 3999.

 Transfer account codes 4000 - 4099.
 Expenditure account codes 6000 - 6999.
The procedures for making the closing entry are:

1. To prepare the last monthly report for the fiscal year and submit the report to
MOFED. If the transfer was sent from MOFED during the fiscal year, it should be
recorded in that fiscal year and not when the cash is received.
2. After the last monthly report for the fiscal year is accepted by MOFED, to record
thefollowing entry in the transaction register of the bank account from Me/He 27
trialbalance:
A. From the line from Revenue /Assistance / Loan:

- Record a debit in the transaction register for any amount that is a credit on
this line in Me/He 27.
- Record a credit in the transaction register for any amount that is a debit on
B. From the line for Recurrent Expenditure:
C. From the line for capital expenditure:
D. From the line for Transfers:
E. In net asset/equity account code 5601 records the appropriate amount as a
debit or a credit to make the entry balance.
- To enter the amount for net asset/equity on the net asset/equity account
code 5601 ledger card in the general ledger; this account should have no
subsidiary ledger.
3. To remove from the general ledgers all general ledger cards for account codes:
A. revenue/assistance/ loan account codes 1000 – 3999

B. transfer account codes 4000 – 6999
C. expenditure account codes 6000 - 6999
4.To remove all subsidiary ledger cards associated with account codes
a. Revenue/Assistance/ Loan account codes 1000 – 3999

b. Transfer account codes 4000 – 6999
c. Expenditure account codes 6000 – 6999
5. To store all general, subsidiary and budget ledger cards that are removed in a file.
The file should be appropriately labeled as ledger cards for the fiscal year.
A closing entry must be made in all general and subsidiary ledgers. If there is an
internal bank account that maintains general and/or subsidiary ledgers, the closing
entry is as follows:
 If the internal bank account is treated as a safe, no closing entry is necessary.

 If the bank account holds deposits only, no closing entry is necessary.
 If the bank account is for non - budgetary funds that are not reported to
MOFED, no closing entry is necessary.
 If a transaction register is maintained for the bank account, but the
transaction register is recorded in a general ledger (with subsidiary ledgers)
that is maintained by the public Body, no closing entry is necessary.
 If the bank account is an accounting unit with its own general and/or
subsidiary ledger, a closing entry is necessary.
 If a monthly report is prepared and sent to the public body, follow the
instructions given above.
 If a monthly report is not prepared, the amounts for the closing entry
(revenue/assistance/loan, Transfer, and expenditure) should be taken
calculated by totaling balances on the corresponding general ledger cards. The
closing entry should be the opposite of the ledger card balance (if the ledger
card balance is a debit, the closing entry should be a credit; if the ledger card
balance is a credit, the closing entry should be a debit).
Each year must begin with a zero balance in all general and subsidiary ledger cards
for account codes:
 Revenue/Assistance/Loan account codes 1000 - 3999.
 Transfer account codes 4000 - 4099.
 Expenditure account codes carry forward from the end of the fiscal year to the
balances in all other account codes carry forward from the end of one fiscal
year to the beginning of the next fiscal year.
Example:Assume a Public body in which you are working as an accountant

prepares its final Me/He 27, which is the trial balance for the fiscal year. The final
report is accepted by MOFED.
The next hypothetical activity will give you a hint on how the final Me/He 27 is
prepared in part.
Account
Account Description Debit Credit
Code
-- Revenue/Assistance/Loan: 1,200,509
-- Expenditure:
-- Recurrent expenditure: 2,680,832
-- Capital Expenditure: 6,377,142
-- Transfers: 2,031,491, 9,703,216
Note that revenue/assistance/loan account balances typically are credits,
expenditure account balances are typically debits, but transfer account balances can
be debits or credits depending on the direction of the transfer.
Also during the period of preparation of closing entry, the following has to be done
by you.
Cash
Account at
Number bank
4103
Dr Cr Dr Cr
1 Closing Entry: --
Revenue/Assistance/Loan -- 1,200,509
Recurrent expenditure -- 2,680,832
Capital Expenditure -- 6,377,142
Transfers -- 9,703,216 2,013,491
Net Assets/Equity 5601 167,740
You have to remove all ledger cards from its general and subsidiary ledgers that have
account codes 1000 - 3999, 4000 - 4099, and 6000 - 6999. The cards are labeled
and filed in storage. You have to record a debit of 167,740 in net asset/equity ledger
card account code 5601.
3.11 Beginning of Year Procedures

According to MOFED and DSA Project manual, December 2002, special procedures
are required: Before accounting for a new fiscal year can begin, and immediately
after the beginning of a new fiscal year.
These special procedures are:
 Opening new ledger cards,

 Recording cash and stock, and
 Procedures at MOFED.
These beginning of year procedures are described here.

Beginning of Year Procedures: Ledger Cards
A set of budget and general ledger cards should be prepared at the beginning of each
fiscal year.
Budget Ledger Cards
Budget ledger cards are valid only for the budget year to which they relate. When
budget notification is received, budget ledger cards should be prepared for each item
of expenditure for each budgetary Institution. The prior year's budget ledger cards
should be filed
General Ledger Cards
General ledger cards for the following account codes are closed at the end of the
fiscal year:
 Revenue/Assistance/Loan account codes 1000 – 3999

 Transfer account codes 4000 – 4099
 Expenditure account codes 6000 - 6999
Closing an account means:
 Setting the account's balance to zero, and

 Filing the account's ledger card'
Balances in all other accounts carry forward to the next fiscal year. However, keeping
the same ledger card may be awkward, since the number of cards becomes bulky.
The public body should begin a new fiscal year by preparing new general ledger
cards for all accounts that have carry forward balances. The beginning balance
(equal to last year's ending balance) should be recorded on each card. Last year's
general ledger cards should be filed with the ledger cards of accounts that were
closed
Example: If a public Body request Birr 100,000 from MOFED. Then the MOFED
transfers only Birr 90,000 assuming that the public Body had Birr 10,000 as
opening balance. At the same time, a recording is made as if the ending cash balance
was transferred back to MOFED as shown hereunder.
Transaction Register of the Public Body:
Cash at
Account Other Bank
No. Description TB
Number 4105
Dr Cr Dr
1. Cash transfer - 4002 90,000
Non- Cash
- 4052 10,000
transfer
Non- Cash
- 4055 10,000 90,000
transfer
Transaction Register of the Public Body:
Account
Other
No. Description TB Number
Dr Cr Dr
Non-Cash
1. - 4055 10,000
transfer
Non- Cash
- 4052 10,000
transfer
Cash transfer - 4002 90,000 90,000
Subsidiary Ledger Cards
Subsidiary ledger cards for closed general ledger accounts should be filed with the
general ledger cards. Subsidiary ledger accounts and related general ledger accounts
also are considered closed. Balances in all other subsidiary accounts carry forward to
the next fiscal year. Unless the number of cards for a particular subsidiary account
becomes bulky, last year's cards can continue to be used in the following year. If the
public body chooses to begin a new fiscal year by preparing new subsidiary ledger
cards, the balance for each subsidiary account carries forward. The beginning
balance (equal to last year's ending balance) should be recorded on each card. Any
subsidiary ledger cards that are replaced should be filed with the ledger cards of
accounts that were closed.
Beginning of Year Procedures Opening Balances
After the last day of the fiscal year, the cash and stock balances at public Bodies are
sealed until Inspectors can verify the balances. MOFED applies the cash and stock
balances against the future requests, as indicated on Ge/Be/We 11/2 or Ge/Be/we
11/3.
Cash Opening Balances
The ending balance in cash in safe and cash in bank at a public body must be
transferred to MOFED at the end of the fiscal year. However, the public body needs
cash transferred to it for the new fiscal year. Rather than moving cash back and
forth, the transfers are handled as non-cash transfers. MOFED deducts the opening
balance of cash in safe and cash in bank from the amount of budgeted cash to be
transferred to the public body. This deduction is made on Ge/Be/We 11/2 or
Ge/Be/We 11/3 and is handled as a non-cash transfer by MOFED and by the public
Body. At the same time, a recording is made as if the ending cash balance was
transferred back to MOFED.
Example: Assume a public Body requests Birr 200,000 from MOFED. MOFED
transfers Birr 190,000 because the public Body has Birr 10,000 as opening balances.
Account Cash at
Number bank 4105
Dr Cr Dr Cr
Cash
1 - 4002 190,000
transfer
Non-cash
- 4052 10,000
transfer
Non-cash
- 4055 10,000 190,000
transfer

Account Cash at
Number bank 4103
Dr Cr Dr Cr
Non-cash
1 - 4055 10,000
transfer
Non-cash
- 4052 10,000
transfer
Cash
4002 190,000 190,000
transfer
Stock Opening Balances
The ending balance in stock at a public body is charged as reduction to the next
year's budget. The reduction is treated as a non-cash transfer and as a reduction to
the amount of cash that can be requested and committed for a particular budgeted
item.
The amount of the ending stock also should be recorded in the transaction register at
MOFED as a debit to non-cash transfer for recurrent expenditure account code 4052
and a credit to other non-cash transfers account code 4055. In its Transaction
Register, the public Body records a debit to other non-cash transfers account code
4055 and a credit to not - cash transfer for recurrent expenditure account code 4052.
Example: Assume inspectors report Birr 145,000 in stock remaining at a Public
Body at the end of the year. A Public Body requests Birr 200,000 from MOFED.
MOFED transfers Birr 55,000 because the public Body has Birr 145,000 as opening
stock balance. And also further assume that you are an accountant of both MOFED
and the public body.
Cash at
Account
Number
4105
Dr Cr Dr Cr
Cash
1 - 4002 55,00
transfer
Non - cash
- 4052 145,000
transfer
Non - cash
- 4055 145,000 55,000
transfer

Cash at
Account
Number
4103
Dr Cr Dr Cr
Non - cash
1 - 4055 145,000
transfer
Non - cash
- 4052 145,000
transfer
Cash
- 4002 55,00 55,000
transfer
In the appropriate stock item's budget ledger card, in the "payment receive" and
"commitment" columns, Birr 145,000 is recorded.
Beginning of Year Procedures at MOFED
In here also, special Procedures are required at MOFED before the accounting for a
new fiscal year can begin. These special procedures include updating for changes to:
the budget, budget codes and account codes. In particular, MEFED must input or
update in the budget/disbursement/accounts program:
1. Budget identification codes for all public Bodies.
2. Budget identification codes for all reporting Entities.
3. The Chart of Accounts for any changes to:
Item of Expenditure
Items of Revenue
Transfers
Assets
Liabilities
4. Annual appropriated budget.
2.12 Cashier Functions

Cashier Functions: Cash Withdrawn from Bank to Safe
The accountant writes a check to the cashier to put cash in the transaction register
and the cashier records the bank payment voucher in the petty cashbook as a debit to
cash.
Example: A check for Birr 3,000 is written to the cashier for petty cash.
Cash at
Account Cash in
No Description TB bank
Number safe 4101
4103
Dr Cr Dr Cr
Cash withdrawn
1 - - 3,000 3,000
from safe
Cashier Functions: Cash deposited in to bank from the safe
The cashier transfers cash from the safe to the bank by depositing the cash in the
bank. The cashier brings the bank deposit slip to the accountant who prepares a
receipt voucher. The accountant records the receipt voucher in the transaction
register and the cashier records the receipt voucher in the receipt cashbook as a
credit to cash.
Example: The Cashier deposits Birr 20,000 in the bank.
Account Cash in Cash at
No Description TB
Number Safe 4101 bank 4103
Dr Cr Dr Cr
Cash deposited
1 - - 20,000 20,000
in to bank
Cashier Functions: Cash and Check Receipts by Cashier
When a cashier receives currency of checks, a receipt voucher is issued. The cashier
records the receipt voucher in the receipt cashbook as a receipt of cash. At the end of
the day, the cashier deposits the cash and checks in the bank and brings all receipt
vouchers and the bank deposit slip to the accountant. The accountant issues a
receipt voucher to the Cahier. The accountant records each receipt voucher in the
transaction register and the cashier records the receipt voucher from the accountant
in the receipt cashbook.
Example: Assume that a Cashier receives a total of Birr 2,000 on the same day. Birr
1,000 in cash is a return of an advance by a staff member, and Birr 1,000 in check is
a court deposit. The Cashier records the receipts in the Receipts Cash Book and
deposits the Birr 2,000 in the bank at the end of the day. The bank deposit slip and
Receipt Vouchers are provided to the Accountant. The Accountant issues a Receipt
Voucher to the Cashier.
Transaction Register of Public Body
Cash at
Account Cash in
Number Safe 4101
4103
Dr Cr Dr Cr Dr Cr
Staff
1 - 4203 1,000 1,000
Advance
2 Deposit - 5052 1,000 1,000
Cash
3 deposited in 2,000 2,000
to bank
Cashier Functions: Cash Imprest Payments to Cashier by Accountant
Each public body should establish the amount of cash to hold in petty cash. The
cashier makes cash payment from the impress fund using cash payment vouchers.
When the petty cash balance is low, the cashier submits the cash payment vouchers
to the accountant. The accountant writes a check to the cashier for the payment
vouchers to the Accountant. The Accountant writes a check to the cashier for the
total amount of the cash payment voucher. The accountant records each cash
document for the check is bank payment voucher in the transaction register. The
cashier records the bank payment voucher from the accountant in the petty cash
book as a debit to cash.
Example: The Accountant pays the cashier Birr 4,000 by check using a bank
payment voucher to replenish the petty cash from a cash payment voucher from the
cashier for Birr 4,000 paid to an employee for per diem. The cashier records the
receipt in the petty Cashbook. The accountant records the cash and bank payment
vouchers in the transaction register as follows:
Cash at
Account Cash in
Number Safe 4101
4103
Dr Cr Dr Cr Dr Cr
1 Per Diem 01 6231 4,000 4,000
Cash to
2 4,000 4,000
Cashier

Analysis of Transactions

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Analysis of Transactions

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Analysis of Transactions

 By MOFED, as a debit to the appropriate transfer code and a credit to 4105,

Transaction Register of Public Body:

 The Service charge should be recorded as a debit to account code 6256.

Transaction Register of Public Body:

Cash Transfers: Between Bank Accounts at Public Bodies and MOFED:

 By MOFED, as a debit to Cash at Bank4105 and a credit to the appropriate

Transaction Register of Public Body:

Cash Transfers: Between Public Bodies

Example: Public Body #1 transfers Birr 90,000 to public Body #2.

Transaction Register of public Body #2:

Transaction Register of Bank Account #2:

3.2 Non - Cash Transfers

Transaction Register of Ministry of Health:

Transaction Register of Customs Authority:

3.3. Receipt of Revenue /Assistance/ Loan

Transfer of collections Directly to MOFED

3.4. Cash Expenditures

Cash Expenditures: Check Payments by Accountants

Cash Expenditures: Cash payment By MOFED on Behalf of Public Bodies

 By MOFED, as a debit to the appropriate transfer code and a credit to Cash at

Cash Expenditures: Letter of Credit

Cash Expenditures: Letter of Credit: Opened by Public Body

Transaction Register - Restricted Bank Account of Ministry of Health:

Cash Expenditures: Letter of Credit: Opened by MOFED on behalf of

Transaction Register bank account MOH:

Cash Expenditures: Cash Payment Requiring Withholding of Tax

Cash Expenditures: Cash Payment Requiring Withholding of Tax:

Transaction Register of MOFED:

Cash Expenditures: Cash Payment Requiring Withholding of Tax:

Transaction #3: MOFED pays tax to region

Cash Expenditures: Construction Projects

 Payment of an advance: Usually the contract calls for an advance payment to

Example: Assume the following:

Transaction #4: payment certificate when 100% complete.

Transaction #3: Next month's salary transfer

Transaction Register of MOFED:

Transaction Register of MOA:

3.6. Receivables and Payables

Receivables and Payables: With MOFED

Transaction Register of Public Body:

Transaction Register of Public Body:

 Long - term salary advances.

Receivables and payables: with Employees: Long - Term Salary

Receivables and Payables: With Employees: Funds Held on Employee's

3.7 Aid in Kind

3.8 Financial Document Transmittal Voucher: Me/He

3.9 Public Bodies who receive No Treasury Funds

3.10 Closing Entry

 Revenue /Assistance/ Loan account codes 1000 - 3999.

The procedures for making the closing entry are:

A. From the line from Revenue /Assistance / Loan:

A. revenue/assistance/ loan account codes 1000 – 3999

a. Revenue/Assistance/ Loan account codes 1000 – 3999

 If the internal bank account is treated as a safe, no closing entry is necessary.

Example:Assume a Public body in which you are working as an accountant

3.11 Beginning of Year Procedures

 Opening new ledger cards,

These beginning of year procedures are described here.

 Revenue/Assistance/Loan account codes 1000 – 3999

Closing an account means:

 Setting the account's balance to zero, and

Transaction Register of the public Body:

Transaction Register of Public Body: